Yes, it sounds like a short-term blip, and these guys will get nailed when the market catches up to them.
I am just a redneck oil driller (I own rigs used to drill up fields), but I do note that people who actually are in the oil business buy, sell, borrow, and lend based on $70/bbl crude.
You’re right, on that. People I know here in Texas say the price of oil should be around $70/bbl as you say.
The trouble is the government changed the rules and created an “exempt commercial market” even after being warned that the market was ripe for manipulation. It’s called the Enron Loophole but others did it too.
By the time the market caught up with Enron, Amaranth and British Petroleum, millions of people were hurt by their manipulating energy markets.
Deregulation of electric rates in Texas has failed miserably because there are only a couple of electric producers. You and I can’t build a coal fired generating plant and sell electricity. We can’t build any kind of generating plant. It is regulated. But the price isn’t regulated.
You and I can’t drill for oil or natural gas in places we both know it exists in huge quantities, because the government placed those places off limits to drilling.
You can’t regulate competition out of an industry and then say let the market set the price.
We have record supplies of oil, minimal increases in demand and record high prices. In an completely unregulated market we’d have low gas prices, not record high prices with record high supply.
I would love to see all regulation of drilling, refining, power generation plant building, etc. done away with and let the market work. But we don’t have that or any chance of getting it.